The Department is an Administrative Unit established pursuant to the Public Sector Management Act 1995, and is responsible for the provision of professional, legal and associated services to the Ministers of the Crown and government agencies. It also services the people of South Australia by upholding their legal and property rights and maintaining community and business standards.
The structure of the Department and its relationship with the Minister is shown in the following diagram:
(1) Statutory officer reporting to Parliament: all other staff appointed under the Public Sector Management Act 1995.
(2) Statutory officer: all other staff appointed under the Public Sector Management Act 1995 or Police (Complaints and Disciplinary Proceedings) Act 1985.
(3) Statutory office holder: all other staff appointed under the Public Sector Management Act 1995.
(4) The Public Trustee is a separate legal entity for financial reporting purposes.
The Department’s ‘net cost of services’ increased by $11.2 million (35 percent) to $42.7 million. Refer to ‘Interpretation and Analysis of Financial Statements’ - Operating Statement for details.
Administered expenses and revenues increased by $640.9 million to $924.9 million (226 percent) and $642 million to $938.7 million (216 percent) respectively. The increases were the result of changed appropriation arrangements and the administration of the Community Emergency Services Fund
Subsection 31(1)(b) of the Public Finance and Audit Act 1987 provides for the Auditor-General to audit the accounts of the Department in respect of each financial year.
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal control.
During 1999-2000 the following Head Office functions were the subject of audit attention:
budgetary control and management reporting
general ledger
accounts receivable
receipting and banking
accounts payable
salaries and wages
asset register
suspense and working accounts
criminal injuries compensation fund.
The audit also incorporated a review of the financial activities of the following divisions of the Department:
Office of Consumer and Business Affairs
Office of the Liquor and Gaming Commissioner
Crown Solicitor’s Office
Office of the Ombudsman
Equal Opportunity Commission.
In addition, Audit reviewed the following areas that affect both the Department and the Justice Portfolio:
Financial Management Framework
Procurement Reform
Goods and Services Tax developments
Administration of the Emergency Services Funding Act 1998.
A number of management letters communicating the issues arising from the audit were forwarded to the Chief Executive and responses have been received. Comments on material issues referred to management are contained in ‘Audit Findings and Comments’ hereunder.
The Financial Management Framework (FMF) became operative in July 1998 under mandate of the Treasurer’s Instructions. Each Chief Executive is responsible for developing, implementing and documenting policies, procedures and systems which are consistent with the prescribed principles set out in the FMF.
Given that 1999-2000 is the second year of operation of the Financial Management Framework (FMF), the status of its implementation for the Justice Portfolio was reviewed. In this regard, Audit assessed compliance with the guidance provided by the FMF on financial management practices and, in particular, some strategic mandatory elements across the Justice Portfolio. It is important to note the following commentary is based primarily on the findings from the review of four of the key agencies within the Portfolio, that being the Attorney-General’s Department, Public Trustee Office, Courts Administration Authority and the Department for Correctional Services.
Audit reported in the 1998-99 Auditor-General’s Report to Parliament that the Portfolio had initiated a number of developments that align with certain prescribed elements of the FMF, that being the:
formulation of a Risk Management Framework;
establishment of financial policies and procedures for eight major systems. This was to be finalised by May 2000.
The approach was to involve representatives from each agency in establishing policies and procedures in line with the FMF which were to be generic in nature, however, agencies could then develop them further to take into account the individual needs of their organisation and structure;
establishment of an Internal Audit function.
Audit follow up during 1999-2000 revealed that while the Portfolio has commenced work on the various aspects of the framework, the level of achievement varies.
The area in which the Portfolio has, in Audit’s opinion, made satisfactory progress is with respect to Risk Management. While the Risk Management Plan had not as at 30 June 2000 been finalised, the Portfolio had made progress towards achieving this in that it has finalised the Risk Management Framework.
With respect to the establishment of financial polices and procedures in line with the prescribed elements of FMF, the Portfolio had not as at 30 June 2000 finalised these for all systems with the exception of one system which was finalised prior to 30 June 1999. Audit does acknowledge that the Portfolio has had to redirect resources during the 1999-2000 year to establish policies and procedures relating to the introduction of the Goods and Services Tax.
Where audit has identified improvements that could be made with respect to the policies, procedures and systems in place or where non-compliance has been noted against at least the prescribed elements of the FMF, these issues have been reported to the Chief Executive of each agency within the Portfolio.
In its response, the Department has advised that the Portfolio has recommenced the process of developing the other financial policies and that it is intended to give priority, during 2000-2001, to developing financial policies for the accounts payable, payroll and purchasing systems.
The Portfolio had not as at 30 June 2000 established an Internal Audit function, however, the intention is to still do so.
During the 1998-99 audit review, Audit was advised that a Strategic Plan would not be prepared for the Justice Portfolio due to the diversity of the activities within it. Instead each agency was responsible for preparing their own Strategic Plans.
The FMF requires that each Chief Executive provide effective planning and analysis processes which will assist management in making decisions to achieve an agency’s objectives. Planning and analysis is an important process in setting the direction, goals and values of an organisation and assisting in decision making.
The Department advised Audit that the Portfolio was in the process of completing a Strategic Directions paper for the Justice Portfolio and that this was to be used by agencies across the Portfolio when establishing and reviewing their own Strategic Plans.
The Department has advised that further work has been carried out on the Strategic Directions document for the Portfolio and that it planned to release this in December 2000. The Department has also advised that the agencies within the Portfolio will be responsible for developing their own strategic plans and that they will link to the Portfolio Strategic Directions. In addition, a Strategic Plan for the Attorney-General’s will be developed during 2000-2001 which will link the divisional strategic plans for the Department.
The Justice Portfolio has, in the main, taken the approach of working together with the agencies within the Portfolio to implement the FMF. While Audit has acknowledged that there are likely benefits in the Portfolio working together through this process, it has pointed out to the Portfolio that it is important that the responsibility of each Chief Executive to implement the FMF within their agency is recognised. Further, each agency within the Portfolio is different in nature and the degree of compliance/non-compliance with the prescribed elements of the Framework will also be different. In working together as a Portfolio, these differing factors need to be taken into account.
The audit review revealed that the Portfolio did not have a plan outlining the implementation process and agencies did not have their own plans in place as to how and when they were going to implement the elements of the Framework. In Audit’s opinion, the Portfolio and agencies need to establish a plan which clearly outlines the direction, structure, approach, timeframes and responsibility of those involved in the implementation process.
The Department has in its response acknowledged that the each Chief Executive within the Portfolio is responsible for developing and implementing the FMF within their agencies. The Justice Portfolio intends to use the Justice Portfolio Agency Financial Committee as the steering committee in assisting and supporting agencies with the implementation of the FMF. In addition, the steering committee will monitor and report to the Justice Portfolio Leadership Group on the implementation progress of the FMF.
Audit will review the developments regarding the implementation of the FMF across the Justice Portfolio during 2000-01.
The review of the specific auditable areas involved an assessment of the adequacy of accounting, record keeping and control, and the test verification of financial transactions processed and recorded during the year. The reviews identified a number of instances where internal control procedures either required improvement or were not applied consistently during the year. The main issues raised by Audit related to the need to:
make procedural changes to enhance the general financial controls over a number of key financial systems;
ensure key reconciliations are performed on a timely basis;
establish proper reporting mechanisms for the management of the Community Emergency Services Fund; formalise Service Level Agreements with the service providers, namely, RevenueSA; establish controls and monitoring systems which will ensure monies related to the Fund are captured and correctly credited to it in accordance with the Act; and establish adequate reporting processes to enable the Department to ensure compliance with the Act and effectively administer the Fund.
While there were a number of control issues raised by Audit, substantive testing of transactions by the Department did not reveal any material errors in the sample of transactions tested.
Last year’s Report referred to a review of some aspects of the Office of Liquor and Gaming Commissioner’s (OLGC) administrative role with respect to monitoring the Independent Gaming Corporation (IGC) monitoring system, inspection activities and operations at licensed hotels and clubs, and taxation revenue collections.
An Audit management letter outlining Audit observations and comments was forwarded to OLGC in September 1999.
The main matters referred to in the letter were :
Audit suggested that OLGC review their ongoing review strategy with respect to IGC following the implementation by the Corporation of the new Advanced Gaming System;
Audit noted that OLGC was considering a risked based approach to venue inspections. Audit considered that OLGC should formally appraise the adoption of a risked based policy and strategy with respect to the frequency and nature of inspection activity.
Other matters raised, included the need to review data management backup and business continuity arrangements in respect to OLGC operations.
During the year OLGC provided written responses to the matters raised by Audit. Those responses were of a satisfactory and detailed nature.
Regarding OLGC administrative responsibility of reviewing IGC’s new gaming system, OLGC has formally considered and actioned this matter through amendment of the gaming machine monitor licence.
In relation to the risked based approach to venue inspections, the Attorney General’s Department is implementing a risked based program and the venue inspection program is also being considered a part of that overall program.
The OLGC has also communicated that business continuity issues were being addressed.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Attorney-General’s Department included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities. The assessment also considered whether those controls were consistent with the prescribed elements of the Financial Management Framework as required by Treasurer’s Instruction 2 ‘Financial Management Policies’.
Audit formed the opinion that the controls exercised by the Attorney-General’s Department in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, except for the matters outlined under ‘Audit Findings and Comments’, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
Total Operating Expenses for the year amounted to $82.3 of which $49.1 (59.7 percent) comprised employee entitlements and related expenses.
Revenues comprise funds provided by Parliamentary appropriations $48.7 million (55.2 percent), fees and charges for services provided $30.4 million (34.4 percent), and other revenues $9.2 million (10.4 percent).
Administered revenues increased by $642 million to $938.7 million and administered expenses increased by $640.9 million to $924.9 million.
These increases are in the main attributed to the Department being responsible for administering from 1 July 1999:
Appropriations received by the Department of Justice. For further details on this arrangement, refer to Department of Justice.
Appropriations received totalled $483.5 million which were forwarded to agencies within the Justice Portfolio. Refer to Schedule of Administered Expenses and Revenues for the year ended 30 June 2000 and Note 5.
The Community Emergency Services Fund. Details are provided under General Commentary on Operations below.
Amounts credited to the Fund for the year totalled $135.7 million and payments from the Fund totalled $135.3 million. Refer to Schedule of Administered Expenses and Revenues for the year ended 30 June 2000 and Notes 5 and 10.
Alternative funding arrangements for emergency services was approved by Cabinet with the introduction of legislation for the establishment of an Emergency Services Levy. The levy came into force from 1 July 1999 under the Emergency Services Funding Act 1998.
The new levy replaced existing funding methods for emergency services based on insurance levies and State and Local Government contributions.
The aim of the new levy is that an equitable and transparent contribution to the cost of emergency services be made by all service sectors that have the potential to benefit from those services.
Contributions, by way of levies, are made by all owners (including both State and Local Government) of both fixed and mobile property to fund the provisions of emergency services. The levy receipts are paid into a fund titled the Community Emergency Services Fund, from which services are funded.
The levy on fixed property applies to capital values adjusted for location and land use and is collected by RevenueSA.
The mobile property levy is collected by the Department for Transport, Urban Planning and the Arts using the vehicle registration system.
The Attorney-General’s Department is responsible for administering the Community Emergency Services Fund. Monies collected by RevenueSA and the Department for Transport, Urban Planning and the Arts are credited to the Fund from which the Department makes payment to the emergency services and the Fund meets the cost of collecting the levies and operating the Fund.
The revenue from the emergency services levy for 1999-2000 was budgeted at $141.5 million, comprising $106.6 million from fixed property and $34.9 million from the mobile component.
The amount credited to the Fund during 1999-2000 was $135.7 million and comprised:
Levy collected by: |
|
|
|
$’000 |
RevenueSA |
|
|
|
89.2 |
Department of Transport |
|
|
|
33.4 |
Levy paid by State Government |
|
|
|
12.6 |
Interest |
|
|
|
0.5 |
|
|
|
|
135.7 |
Outstanding levies on fixed property as at 30 June 2000 totalled $7.7 million, of which $1.7 million relates to remissions due from the State Government. The remaining $6.3 million has not been recognised in the Department’s financial statements.
Payments totalling $135.3 million were made from the Fund as follows:
|
|
|
|
$’000 |
Emergency Services Administrative Unit(1) |
|
|
|
94 |
SA Police |
|
|
|
16 |
Department for Administrative and Information Services |
|
|
|
13.0 |
Department for Environment and Heritage |
|
|
|
1.9 |
SA Ambulance |
|
|
|
0.8 |
Surf Lifesaving |
|
|
|
0.3 |
Levy collection fees: |
|
|
|
|
RevenueSA |
|
|
|
8.3 |
Department of Transport |
|
|
|
0.2 |
Administration costs - Attorney-General’s Department |
|
|
|
0.8 |
|
|
|
|
135.3 |
(1) The Emergency Services Administrative Unit distributed these funds to the:
Country Fire Services
SA Metropolitan Fire Services
State Emergency Services.
The emergency services levy budget for 2000-2001 is $141 million.
The Gaming Machines Act 1992 provides for the Liquor and Gaming Commissioner to be responsible to the Gaming Supervisory Authority for the constant scrutiny of the operations of all licensees under the Act.
Pursuant to the Act the Commissioner is responsible for the approval, issue and administration of five different types of licence namely: the Gaming Machine Licence, the Gaming Machines Dealers Licence, the Gaming Machine Suppliers Licence, the Gaming Machine Service Licence and, the Gaming Machine Monitoring Licence.
Under the Act and appropriate schedules and regulations, the operations of gaming machines in licensed premises result in the average return to patrons being not less than 85 percent and a prescribed percentage of net gambling revenue (NGR) approved by the Treasurer, being paid into the Consolidated Account.
The Government has introduced a new tax structure for licensed clubs and hotels operating gaming machines in South Australia, effective from the 1998-99 financial year.
The prescribed percentage of NGR to be paid into the Consolidated Account is as follows:
Tax Threshold on Annual NGR |
Tax Rate |
Non-profit business: |
|
$1 - $399 000 |
30 percent |
$399 000 - $945 000 |
$119 000 plus 35 percent of the excess NGR over $399 000 |
$945 000 and over |
$310 800 plus 40 percent of the excess NGR over $945 000 |
|
|
Other: |
|
$1 - $399 000 |
35 percent |
$399 000 - $945 000 |
$139 650 plus 43.5 percent of the excess NGR over $399 000 |
$945 000 and over |
$377 160 plus 50 percent of the excess NGR over $945 000 |
Pursuant to the Gaming Machine Act 1992 (the Act), the Liquor and Gaming Commissioner granted the monitoring licence, in accordance with section 25, to a body corporate known as the Independent Gaming Corporation Limited (IGC).
The IGC is an unlisted public company owned by the Hotel and Clubs Industry and is controlled by a Board of Management made up of two representatives from each of the Australian Hotels’ Association (SA Branch) and Licensed Clubs’ Association of South Australia and, three independent directors.
The IGC, in discharging its responsibilities with respect to monitoring of gaming machine operations in licensed venues has, with the Treasurer’s approval, set a charge on licensed gaming machines operators to provide for the ongoing cost recovery of its operations.
Section 75 of the Act, specifically provides for the accounts and operations of the body corporate (IGC), in performing its monitoring role, to be audited by the Auditor-General.
With respect to the 1999-2000 operations, the audit of the IGC has been completed and an unqualified audit opinion issued.
Gaming Revenue is reported as an administered item in the financial statements of the Department.
Revenue from gaming machine activity has continued to increase since operations went live in licensed premises on 25 July 1994. In the reporting period, receipts credited to the Consolidated Account totalled $210 million ($188.3 million in 1998-99).
Other statistics which illustrate the sustained growth in gaming machine operations, with turnover continuing to rise, area provided in the following table:
|
2000 |
1999 |
1998 |
1997 |
Sites |
565 |
539 |
514 |
485 |
Machines |
12 778 |
11 944 |
10 938 |
10 491 |
Turnover ($’billion) |
4.1 |
3.7 |
3.3 |
3.0 |
Revenue from total gambling activities increased by $24.4 million to $339 million.
The following graph highlights revenue
credited to the Consolidated Account from gambling activities over the past five years and
reflects a significant increase in contributions from gaming machines in comparison to the
Casino Operations and other forms of gambling:
Gambling Revenue
(1) Other includes:
Lotteries Commission
South Australian Totalizator Agency Board
On-course totalizators, bookmakers and small lotteries.
The Criminal Injuries Compensation Act 1978, provides for payment of compensation to persons who suffer injury as a result of criminal acts and the recovery of these amounts from the offenders. The maximum compensation that may be awarded under the Act is $50 000. Payments made for the year through a Special Deposit Account titled ‘Criminal Injuries Compensation Fund’ totalled $8.8 million ($9.9 million) on account of 1173 (1196) compensation claims.
The Attorney-General can recover, as a debt, from an offender who has been convicted of an offence, the amount of any payment made by the Attorney-General pursuant to the Criminal Injuries Compensation Act 1978. Recovery of amounts is difficult as a large majority of compensation claims are for unknown offenders. This is demonstrated by the following:
Outstanding amounts at 30 June 2000 were $38.9 million ($36.1 million).
Write-offs for 1999-2000, relating to known offenders totalled $2.6 million ($5.9 million).
As a result of the size of compensation payments and the minimum amounts recovered from offenders, funds were transferred from the Consolidated Account to enable compensation payments to be made.
The following graph illustrates compensation payments and claims made over the past five years.
Compensation Payments and Claims Made
